L4 load balancing is fairly simple, two servers sharing the same IP address. You get redirected to the less-busy server.

L7 is much more complex, you're redirecting the traffic by application. In a web-based scenario, that could mean one server is doing only PHP, another only JAVA, and third one is serving up the graphics.

So, for example, if you goto a web site and you view a video or place an order, those specific intensive and/or critical web services are handed off to different servers.

"Layer 7 load balancing also allows for increased efficiency of the application infrastructure. For example, only two highly tuned image servers may be required to meet application performance and user concurrency needs, while three or four optimized servers may be necessary to meet the same requirements for PHP or ASP scripting services. Being able to separate out content based on type, URI, or data allows for better allocation of physical resources in the application infrastructure."